Gifting or selling land when you already have Medicaid. Will you lose your Medicaid?

As far a I PERSONALLY know about this (which is very little) the answer is a big "Yes." She will have to spend the money if she sells it. Yes, if she gets money from anywhere she will lose the medicaid. And if the land is just let to sit, then the medicaid recovery will take that portion owing to them when it is sold. There are lawyers out there who specialize in "asset protection" (for whatever portion of the estate THEY want for doing that). For me, wouldn't touch it all with a 10 foot poll. Let Mom's land sit. Real Estate for the most part goes up, and when it goes down it goes up again. When she is gone let the medicaid recovery process go and give back what is owed. The land is her asset. It should be spent for her, by her, or recovered for care the government gave to her.
There is no reason NOT to see an Elder Law attorney because I am just blabbing along with no real knowledge. Always go to whoever IS in the know. Does your Mom have a medicaid caseworker? Call medicaid. This is a fairly easy question given the ones they usually have to negotiate.
Good luck. If you learn the real facts, give them to US when you do.

You don’t need an elder law attorney when dealing with community Medicaid and if she’s not going to need long term care within the next 5 years then asset protection isn’t an issue either. Her assets don’t need to be protected here. She’s not on LTC medicaid so the eligibility guidelines are different. She’s in on community Medicaid. If she sells the property, she will loose her Medicaid eligibility because the money is considered income. There’s no hiding income when it comes to Medicaid HEALTH INSURANCE which is what your mom has. Her income is what determines her eligibility. So yes she will lose her Medicaid until the money has been spent. If she’s gonna need LTC in the next 5 years then the ship has kinda sailed as far as asset protection because of the 5 year look back. There are things you can do with the money such as prepay for funerals & medicaid will allow that but basically if you sock away all her assets and she needs LTC 2 years from now, she’ll be self pay during the Medicaid penalty period. She’ll have to use her assets regardless, for a few years at least.

Worried is spot on abt community Medicaid and how it looks at income & assets. But I think you should start to think about the future as her care needs increase & LTC NH Medicaid gets needed.

So what’s the backstory on the land?

It has a value determined by the local tax assessor.
Find the last tax bill to see what it is. Most tax bills have 2 sections each with $ value. If it’s just raw land, it may read “improvements $ zero” (a house or other outbuildings are improvements) and “land $23,456.78” with a tax bill of maybe $469.14 (5%). That land value is what in theory it can be sold for. LTC NH Medicaid is likely gonna want it sold for that value as it’s land and so not an exempt asset like her homestead could be.

Should she apply for LTC Medicaid (& personally I Think you should assume that eventually this is gonna be in her future), Medicaid will look at that plot as an nonexempt asset that could be sold to have her as private self pay till she runs out of $ and now impoverished enough for LTC NH Medicaid to pay as she’s financially “at need”. You need to start thinks how to contest this.

I’m guessing that property is kinda a real POS raw hard scrabble
& out of the way for development. Does it have full egress to existing state road? Or is it landlocked? Was it once part of a family farm or ranch and that got parceled out ages ago? If so, was her share considered undivided interest? Any mineral rights running thru & if so how long ago was royalty paid? All this kind of stuff affects land value.

What these ?s are getting at is IF there’s something about it that truly makes it an “inaccessible asset”. If it can be established as an inaccessible asset, then it’s likely ok for Medicaid to exist with her as owner as it can’t realistically be sold. If it were me, I’d find a Realtor and place it on the market with MLS type of listing at whatever value assessor has it at. Listing for the standard 6 mo Realtor contract. Then another 6 mos with price reduction, with the same Realtor. Then after that year is over, a fresh listing with another new Realtor. If it doesn’t sell and there’s like zero interest..... it never gets a showing, no offers made, then all this helps to clearly establishes it’s an asset with no realistic sale value. Exists as an asset but inaccessible. You keep all records on this and use to document to Medicaid why it’s not an asset that can be sold..... an inaccessible asset.

Stuff like this happens, often elders home has decades of delayed maintenance but located amidst lots of renovations so it’s assessor property value is totally whack. And unrealistic for what Medicaid would like as they want it sold for FMV which is usually tax assessor set price. It if were me, I’d use my DPOA with full financial authority to put it on the market & let it ride out over couple of Realtors over next year & 1/2. Then it goes back to just sitting there.

She does NOT want to gift it. That opens a hornets nest of gifting issues for Medicaid. You don’t want to go there.... She keeps it.

She will need to pay property taxes on it though. Until she goes into a NH & onto LTC NH Medicaid, she’ll have her SS income to pay taxes. If taxes are manageable, to me, she should pay it. You have enough to deal with and don’t need to add tax delinquency / tax sale drama to your lives. But once she goes into LTC, she has to pay NH almost all her monthly income. You might want to give some thought as to whether or not in that future if you want to deal with paying taxes. Or just let the county take it.

Igloo, excellent answer and insight, especially as to the potential of the land.   You raise good issues, including accessibility.  Demographics would factor into the value as well.  

Speaking ONLY to the value of the land, there's another, somewhat opposite, potential as well, depending on location, status of development in the area, zoning, land configuration (i.e., no restrictions to building, no hazardous waste).    It may have significant commercial value.  

Properties in my already heavily developed area are still being bought up and used for new commercial buildings or residential complexes.    Access to good highways or freeways, positive demographics, developing areas, in place commercial zoning, no haz mat issues, and more could make this property quite valuable.   

I like Igloo's suggestion of getting it evaluated by a realtor (or 2 or 3).   Also check the tax statements to see  if its value is  appreciating.  If it is, and you don't need the funds right now, let it appreciate, as long as you can still pay taxes from your mother's funds.    Calculate the % of appreciation though, and do the background work to determine the potential value in the forthcoming years.

And I'm addressing ONLY the issue of selling it now vs. in the future, not the Medicaid implications.

Low income housing if federally funded, is income and asset based. She may not qualify with property assets. And there is also the issue of availability. In my area there are two to three year waiting lists for low income senior apartments. A friend’s mother in southwestern Ohio has been on waiting lists in four counties and multiple communities for over 18 months and has only moved up a few spaces. In WV in some areas the waiting lists are closed. My DIL’s mom has tried to apply in Hagerstown MD. Waiting lists for some desirable areas are closed. Some waiting lists open in other parts of town.

You will likely be the all-things-Medicaid contact for your mom soon, if not already.

If the property sales, she will be disqualified and must spend down these funds before she is qualified in the future. Has Medicaid not indicated a position on this? Our state/county makes it crystal clear that once a property sales, all those funds must be exhausted before the person can get Medicare or public housing.

Once exhausted, she would reapply. The 5 year look back would commence, regardless of what she did/didn't have or own during those 5 years. How come she can not do anything with the property? Has she given you any clues as to why?

If your mom hasn't the money, you will have to pay for an appraiser, a real estate attorney, and property inspector. If there are questions as to boundaries - this tended to happen more often in the earlier days, then a surveyor may be needed. If you can determine the answers to some of her issue, you will have an easier time dealing with whatever comes next. Try to operate on the basis of "no surprises" in order to not be taken advantage of. After all, Mom can not be her own advocate at this point.
I would interview a couple agents to determine what they know about the overall properties within her area of town or countryside. If it's in a valuable area for potential development, agents will be interested. If it's on a fault line or an abandoned mine for example, that could change the outcome drastically.

Subsidized housing and nursing homes both require she not have any assets to speak of. She must use any proceeds from the sale for her own support until she runs out of money. The Medicaid and subsidized housing can be considered.

Either you or Medicaid will have to take charge. If it turns out to be valuable property by all means take charge. If something like the fault line or abandoned mine is part of the parcel, maybe the state should take on that headache.